European Community: Fraud (Hansard, 12 June 1990)

The Paymaster General (The Earl of Caithness)
My Lords, yes, but the situation is of course kept under review. The Government are particularly conscious of the need to ensure that, in allocating scarce resources, high priority is given to combating fraud and irregularities.

Lord Campbell of Croy
My Lords, I thank my noble friend for his Answer. Will the recent report from the European Court of Auditors help? That drew attention to particular incidents. Is it possible to ensure that prosecutions are not started without supporting evidence so that they do not collapse like the case last month at Winchester?

The Earl of Caithness
My Lords, yes, we welcome the report of the Court of Auditors on export refunds. We will look at it carefully. We have already taken some action to cover the deficiencies that were identified with regard to the United Kingdom.
On the second point that my noble friend raises, it is of course a fact that there might be a lot of evidence, but at the end of the day it is a question for the judge and jury on the weight of the evidence.

§ Lord Cledwyn of Penrhos
My Lords, does the noble Earl agree that this is a matter of the utmost gravity? Will he say what response he received from the Chancellor of the Exchequer when he approached him after I last raised the matter in the House on 30th April? Is not a White Paper giving the country and Parliament some idea of the range of the problem and the steps being taken by Her Majesty's Government to deal with it now very necessary as we approach 1992 and all the problems involved in that?
Can the noble Earl say whether the Government have in mind to set up a supra-national agency to 148 deal with this, as was indicated some months ago by Mr. Peter Brooke when he held his previous office?

The Earl of Caithness
My Lords, I certainly agree with the noble Lord the Leader of the Opposition on the importance of the subject. I discussed the possibility of a White Paper with my right honourable friend the Chancellor of the Exchequer. We are still considering the matter and a decision has not been taken. However, there is a great deal of evidence in front of everybody at the moment. It is important to remember that this problem cannot be solved by the United Kingdom alone; it is a matter not only for all other member states but also for every country in the world that benefits from trade.

§ Baroness Robson of Kiddington
My Lords, is the Minister aware that the funding for the special fraud unit is now almost double the funding for the Court of Auditors? Is it not rather a matter of shutting the gate after the horse has bolted? Would not the right answer be to give increased funding and powers to the Court of Auditors?

The Earl of Caithness
My Lords, that is a question which the noble Baroness has asked me before. If I remember rightly, it is something that we might consider if there is a second IGC, which has still yet to be decided at the forthcoming meeting of foreign affairs Ministers.

Lord Boyd-Carptenter
My Lords, can my noble friend quantify the loss to the United Kingdom over the last year or two as a result of these frauds?

The Earl of Caithness
No, my Lords. It is extremely difficult not only to assess the level of fraud but also the amount of the loss. In 1989 13,206 cases were dealt with by the intervention board and Customs.

Lord Bruce of Donington
My Lords, I must apologise for being absent while the noble Earl gave his initial Answer. Have his replies taken into account the devastating report produced by the National Audit Office and published last Thursday? It stated: Failure of an element of the Board's accounting systems temporarily prevented effective debt management and the UK currently faces a potential disallowance of £1.3 million in respect of uncollected and aged debts". Will the Minister say whether this report as a whole has been taken into account and whether action will be taken upon it?

The Earl of Caithness
My Lords, the report to which the noble Lord refers has been taken into account. We shall study it very closely.

The Viscount of Oxfuird
My Lords, will my noble friend say whether the auditors' report has been discussed in the European Council?

The Earl of Caithness
Yes, my Lords. As a result of an initiative by my right honourable friend the Chancellor of the Exchequer, the report was put on 149 the agenda for discussion at ECOFIN yesterday. It was duly discussed and some useful presidency conclusions were agreed by everyone. It was agreed that a working party under the heads of representatives in Brussels should be set up to report both to the Agriculture Council and to ECOFIN ministers as soon as possible in view of the urgent nature of the report. I shall be at Strasbourg tomorrow to continue the good work of the United Kingdom's initiative.

§ Lord Benson
My Lords, is the noble Earl aware that in the past 16 months there have been no less than three reports? There was the Select Committee report of 21st February 1989, the Court of Auditors report of 5th April 1990 and the report of the National Audit Office issued last week on 5th June. All the reports draw attention to numerous examples of failure to detect and prosecute fraud in the United Kingdom. Will the noble Earl be good enough to tell the House what machinery is in post or is proposed to clear up these deficiencies in administration?

The Earl of Caithness
My Lords, I agree with the noble Lord that there have been three reports in the recent past. I am sure the noble Lord agrees with me that there has never been such an intensive effort on this matter within Europe as has occurred during the past 12 months. We agree that that is not enough, however. We know that every country has a lot to do, and we know that the Commission has a lot to do to put its house in order. However, we have taken action and we shall continue to study the reports. Where there is a need to take further action we shall do so.